April 25, 2019 / 7:05 PM / a year ago

Med crude-Urals diffs reach all-time high as quality issue limits supplies

MOSCOW, April 25 (Reuters) - Russian Urals crude oil differentials reached an all-time high on Thursday as concerns over the grade’s quality and suspension of pipeline supplies to Poland, Germany and Slovakia fueled demand for remaining ‘unaffected’ barrels of the grade.

Urals crude oil quality was badly affected by organic chlorides on the ‘Druzhba’ pipeline and at Ust-Luga port, which left buyers with a limited supply of ‘normal’ Urals loading from the Black Sea’s Novorossiisk and Primorsk ports.

The quality problem arose last week when an unknown Russian producer contaminated oil with high levels of organic chloride, which is used to boost oil output but must be separated before shipment as it can destroy refining equipment.

Loadings from Ust-Luga port were suspended on Wednesday as buyers refused to purchase cargoes due to quality concerns.

Surgutneftegaz awarded in a spot tender on Thursday two cargoes for loading from Primorsk on May 11-12 and 14-15 at dated Brent plus $0.70 a barrel to BFOE when adding freight to an original FOB differential, traders said.

The price level was some 50 cents a barrel firmer than the recent estimations and the highest in five and a half years, Refinitiv Eikon data showed. Both cargoes were purchased by France’s Total, traders said.

The producer also awarded two cargoes for loading from Ust-Luga on May 10-11 and 17-18 to Total and Glencore respectively, traders said, adding that the cargoes were sold at far weaker price than those for loading from Primorsk, but the price level was not available immediately.

Also, Surgutneftegaz failed to award another 200,000 tonnes of Urals crude oil for loading from Ust-Luga port on May 11-12 and 13-14, which was offered in a tender, due to a lack of the bids for the cargo, market sources said.

The producer sold a Urals cargo of 140,000 tonnes for loading on May 15-16 at premium close to $0.70 a barrel to BFOE to Azerbaijan’s SOCAR, traders said.

Smaller Urals cargoes of 80,000 tonnes for loading in May traded at a premium above $1 a barrel, which is a historical maximum for Urals crude oil, traders said and Reuters data showed.


Surgutneftegaz issued a spot tender to sell 680,000 tonnes of Urals crude oil for loading from Primorsk, Ust-Luga and Novorosiisk.

The producer offered buyers four cargoes of 100,000 tonnes each for loading from Primorsk on May 19-20, 23-24, 24-25 and 26-27. Two cargoes for loading from Ust-Luga on May 11-12 and 13-14, which the company failed to sell in the previous tender. Surgutneftegaz also offered a cargo of 80,000 tonnes of Urals loading from Novorossiisk on May 22-23, they added.

The tender closes on Apr. 26 at 1400 Moscow time (1200 GMT). (Reporting by Olga Yagova and Gleb Gorodyankin, editing by Alexandra Hudson)

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